Technological Systems in the Bio Industries

Over the past twelve years the aim of Sweden’s Technological Systems (STS) project has been to identify the role of technology in economic growth. While the importance of technology is generally accepted, its role in the economic growth process continues to be only partially understood. The interdependencies between technological change and economic growth become particularly important when the rate and scope of technological change increase. Under these conditions there is a risk that the institutions, policies, and organizations, as well as the concepts and perceptions on which they are based, become obsolete.

The aim of the STS project is to identify the role of technological change in economic growth. While the importance of the relationship between technological change and economic growth is generally accepted, its nature continues to be only partially understood. Certainly, the linkage between technology and economy is complex and in certain respects circular: the role of new technology is crucial, but its impact presupposes that certain general economic and institutional preconditions are fulfilled. While some of these preconditions (i.e., well-functioning markets and appropriate incentive structures) may be fairly general, the structure and dynamics of technological change vary considerably over time and across different fields. These variations are reflected in economic organizations and institutions.

As explained in Chapter 1, we have chosen to focus our international comparison mainly on the area of biomedicine, defined broadly to include pharmaceuticals (not only those based on biotechnology), medical equipment and supplies, diagnostics, software, and a variety of supporting services. This means that our primary unit of analysis here is a cluster, not a technological system. It is not a technological system because it is not defined solely by a particular set of technologies. Instead, the main criterion for including a particular activity in our analysis is whether it produces goods and services for use in the provision of health care, either directly to patients or indirectly via health care providers (hospitals, clinics, physicians, and so on). Since the unit of analysis is defined from the perspective of the end users, it would be appropriate to refer to it as a competence bloc consisting of parts of several technological systems, including biotechnology, mechanical engineering, information technology, software, and materials. Yet we refer to it in the following as a cluster rather than a competence bloc, since we are more interested in a general overview of the composition, structure, and institutional infrastructure than in the particular actors (customers, innovators, entrepreneurs, venture capitalists, exit markets, and industrialists) who may convert the cluster into a competence bloc (see further discussion in Chapter 9 in this volume). The main goal of our inquiry is to understand both the similarities and the differences in the development of the biomedical clusters in Ohio and Sweden.

This chapter deals with the question raised in Chapter 4 — namely, “Why has the biomedical cluster in Ohio grown faster and become more fully developed than that in Sweden?” By analyzing firms that develop and/or produce biomedical products, the core actors of the cluster in terms of economic value creation, we will show that a partial answer lies in the managerial competencies of fines, an outcome of the competence bloc they are operating within (Eliasson and Eliasson 1996). The analysis of firms’ competence will be operationalized through the analysis of three main factors: production and technology competencies, technology transfer capabilities, and commercialization strength.

The previous chapter discussed the divergent cluster performance in Ohio and Sweden as perceived by the firms in these clusters. In this chapter we address the same questions from a different perspective. More precisely, here the purpose is to examine the supporting structure of organizations in the biomedical cluster in Sweden and Ohio. There are two reasons for this focus. First, it is apparent from the interviews in Chapter 5 that the differences in cluster performance are related to the supporting organizations in each region. Second, previous research has emphasized the role of organizations, such as universities and venture capitalist firms, as important for growth and industrial dynamics (Dosi 1988; Saxenian 1994; Carlsson 1995 and Stankiewicz 1995; Eliasson 1997; Braunerhjelm 2000). Thus, the analysis is extended to the similarities and differences in the composition of the organizational support structure of the biomedical cluster in the respective regions, why it differs, and what the implications are for the growth of the biomedical cluster.

In this chapter we narrow the focus even further compared to the previous chapters. Whereas Chapter 7 studies the technological system for biomaterials, a subsystem within the biomedical cluster, the present chapter examines the emergence and commercialization of two new technologies involving biomaterials — namely, titanium implants. The purpose is to compare the performance and dynamics of two biomedical firms, one in Sweden and one in Ohio. Each firm is viewed in the context of the competence bloc of which it is a part, and the various supporting functions of the competence bloc are analyzed.

Biotechnology is becoming an increasingly important industrial technology, notably in the health care, pharmaceutical, agricultural, and food production fields. While it was once heralded as a radical technological revolution in pharmaceutical industry, its largest and fastest attainable potential may be in agriculture and food industry. The agricultural market is larger, but the profit margins on R&D are low, since a large part of the consumers who will benefit live in poor countries. However, functional foods, genetically modified food (GMF), and other forms of plant biotechnology are up and coming and may open up new and more prosperous markets — provided they are not rejected by the market or blocked by political regulation.

The global pulp and paper industry is in physical terms one of the largest industries on the globe. Among biomass-transforming industries, pulp and paper is probably the economically most important.

The aim of this book, and indeed of the entire project of which it is a part, is to gain a better understanding of the nature and role of technological change in economic growth and in improving the human condition. It is time to summarize what we have learned.